Macroeconomics Review: Modules 22, 23, 25

A physical asset is:

A claim on a tangible asset that gives the owner the right to dispose of it as he or she wishes

A financial asset is:

A claim that entitles the owner to future income for the seller

Which of the following would qualify as an asset from the viewpoint of a household?

A house: an asset is anything that you have ownership of

A loan is:

A lending agreement between an individual lender and an individual borrower

A stock is a company is:

A share of ownership of a company held by a shareholder

Investment spending refers to:

Adding physical capital

The savings-investment spending identity says that savings and investment spending are:

Always equal for the economy as a whole

The term "liquid asset" means:

An asset that can be quickly converted into cash with relatively little loss of value

An illiquid asset:

An asset that can't be quickly converted into cash with relatively little loss of value

From the standpoint of economic growth, banks are important to:

Channel savings into investments

The budget balance is equal to:

Difference between government revenues

In a closed economy, all investment spending must come from:

Domestic savings

An important role of financial systems is to:

Facilitate the flow of capital between savers and borrowers

The dollar in your pocket is described as:

Flat money; has value because they say so

Which of the following is considered investment spending in macroeconomics?

GM builds a new plant to manufacture cars

The government saves when it:

Has a budget surplus

Net capital inflows equals

Imports minus exports

A difference between a closed economy and an open economy is that:

In an open economy, economies are open to trade with one another while a closed economy does not have any sort of economic relations with the rest of the world

Private savings is equal to:

Income less consumption

A bond is:

Loan in the form of an IOU that pays interest

To help increase investment spending, the government can:

Lower taxes on returns from savings, so that total savings increase and the interest rate falls

Financial intermediaries that manage a stock portfolio then sell shares of the stock portfolio to investors are:

Mutual funds

In an open economy, total investment is equal to:

National savings + capital inflow

A mutual fund:

Portfolios of stocks and bonds selected and purchased by mutual fund companies

Financial markets make the process of borrowing large amounts of money easier because they simplify the negotiation process between borrowers and lenders. This is an example of:

Reducing transaction cost

In an open economy:

Savings can come from all of the following EXCEPT consumption

A budget surplus would exist when which of the following occurs:

Tax revenue is greater than government spending

National savings is the sum of private savings and:`

The budget balance

If the price of an asset is expected to rise in the future:

The financial asset will be more in demand today

Human capital refers to:

The knowledge and skills embodied in a country's labor force

A household's wealth is:

The sum of its assets

A liability is:

a requirement that you pay income in the future

When a household makes a loan to a firm with the firm providing interest to the household, this is known as:

bond

Which of the following is considered to be an IOU?

bond

which of the following would accurately characterize the portion of a firm's profit paid to the owner of one share of its stock?

dividend

In a closed economy, national savings is equal to:

investment

A financial intermediary that creates a diversified portfolio of stocks and then resells that portfolio to individual investors is known as

mutual fund

A share in the ownership of a company held by a shareholder is considered a(n):

stock

When a corporation borrows money from a bank to expand its factory plant, the corporation is:

taking out a loan

The value of all accumulated savings of a household is considered:

wealth